Kangaroo to be investigated by Competition Commission

Kangaroo, the video-on-demand tie-up between the three main terrestrial broadcasters, is to be investigated by the Competition Commission, casting doubt on the likelihood of the service going live this year as planned.

The joint venture proposes a single place for viewers to access a vast archive of TV programmes from the BBC, ITV and Channel 4. But the Office of Fair Trading (OFT) has referred its consideration of the scheme on to the commission because of concerns that such a concentration of programme libraries could constitute unacceptable market power, particularly when it came to setting prices for syndicating content to wholesale customers.

While the Kangaroo team did try to remedy some of the points raised by the OFT, there is so much uncertainty about how the nascent video-on-demand market, and related online download and rental services, might function it warrants closer examination. Simon Pritchard, a senior director at the OFT, said: "Video on demand is a new and fast-growing consumer sector, and we should judge the issues on evidence, rather than speculate about consumer behaviour."

The commission's investigation will run until early December and Kangaroo's supporters claim the delay leaves the door open for global giants like Google to steal a march on the UK broadcasters. Michael Grade, the ITV executive chairman, is calling for a level playing field. "This venture has been delayed by a reference to the Competition Commission, at the very same time that non-UK companies like Google and Apple are free to build market-dominating positions on line in the UK without so much as a regulatory murmur," Mr Grade said.

But there is undoubtedly concern in the wider industry, not least because so few details are known about what Kangaroo is and how it will function. "There have been all sorts of straws in the wind about what content will be in there and how it will be distributed, but it is all just rumour and hearsay," one industry source said.

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